Question: XO-20 is an oil-based product used to remove rust on bolts and nuts that are stuck. Its accounting system uses standard costs. The standards per 0.5-liter can of solution call for 0.69 liters of material and 4 hours of labor. (0.69 liters of material are needed due to evaporation in the production process.) The standard cost per liter of material is $2.5. The standard cost per hour for labor is $12.40. Overhead is applied at the rate of $15.70 per can. Expected production is 7,600 cans with fixed overhead per year of $37,620 and variable overhead of $10.75 per unit (a 0.5-liter can).
During 2015, 7,970 cans were produced; 12,200 liters of material were purchased at a cost of $58,072; 10,080 liters of material were used in production. The cost of direct labor incurred in 2015 was $363,069, based on an average actual wage rate of $10.71 per hour. Actual overhead for 2015 was $121,000.
a. Determine the Standard Cost Per Unit. (Round answer to 2 decimal places)
b. Calculate material, labor, and overhead variances.(Round answers to 0 decimal places)
Material Price Variance
Material Quantity Variance
Labor Rate Variance
Labor Efficiency Variance
Controllable Overhead Variance
Overhead Volume Variance